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The Effects of Retirement on Physical and Mental Health Outcomes


  • Dhaval Dave

    (Department of Economics, Bentley College and National Bureau of Economic Research, 175 Forest Street, AAC 195, Waltham, MA 02452-4705, USA)

  • R. Inas Rashad

    (Department of Economics, Georgia State University & National Bureau of Economic Research, Andrew Young School of Policy Studies, P.O. Box 3992, Atlanta, GA 30302-3992, USA)

  • Jasmina Spasojevic

    (Department of Public Affairs, Metropolitan College, School for Public Affairs and Administration, 75 Varick Street, New York, NY 10013, USA)


While numerous studies have examined how health affects retirement, few have analyzed the impact in the reverse direction. Using the Health and Retirement Study (1992–2005), this paper estimates the effects of retirement on indicators of physical and mental health. To account for biases from unobserved selection and endogeneity, panel data methodologies are used, augmented by counterfactual and specification checks. Results indicate that complete retirement leads to a 5–14% increase in difficulties associated with mobility and daily activities, 4–6% increase in illnesses, and 6–9% decline in mental health (evaluated relative to the sample mean). The adverse health effects are mitigated if the individual is married, engages in physical activity, or continues to work part-time post-retirement. Evidence also suggests larger adverse health effects in the event of involuntary retirement. Retiring at a later age may lessen or postpone poor health outcomes for older adults, raise well-being, and reduce health care services utilization.

Suggested Citation

  • Dhaval Dave & R. Inas Rashad & Jasmina Spasojevic, 2008. "The Effects of Retirement on Physical and Mental Health Outcomes," Southern Economic Journal, John Wiley & Sons, vol. 75(2), pages 497-523, October.
  • Handle: RePEc:wly:soecon:v:75:2:y:2008:p:497-523

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    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies


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